COVID-19 Legal Update: How Are Evictions And Lien Foreclosures Impacted Following California Executive Order N-28-20?

On March 16, 2020, Governor Gavin Newsom issued Executive Order N-28-20 (“Order”) regarding evictions and foreclosures in California. This Order is relevant to every person and business involved in the rental, ownership, or possession of lien rights associated with property in the State. The Order is in effect until May 31, 2020, unless extended.

The Order expressly suspends any state law that preempts or otherwise restricts a local government’s ability to limit residential or commercial evictions in certain circumstances. Specifically, when the basis for such eviction is the non-payment of rent or a foreclosure arising out of a substantial decrease in household income caused by the COVID-19 pandemic (or any governmental response to COVID-19), and is documented. The purpose of this suspension is to allow local governments to determine if, and under what conditions, they wish to limit evictions in their jurisdiction. The Order also retroactively approves those actions taken on or after March 4, 2020 by localities (for example San Francisco). Accordingly, interested parties will need to refer to the latest guidance from their City or County before deciding to evict a tenant to ensure that the latest in eviction laws are being complied with.

The Governor has also requested that financial institutions holding home or commercial mortgages, including banks, credit unions, government-sponsored enterprises, and institutional investors, implement an immediate moratorium on foreclosures and related evictions when those actions are associated with COVID-19 events. The order appears to apply to the actual act of foreclosure, and does not reference the recording of a Notice of Default or a Notice of Trustee’s Sale associated with a default on a lien. However, before moving forward with recording documents in furtherance of a non-judicial foreclosure, it would be prudent to confirm that the Governor’s request has not been changed to a mandate.

If you have specific questions about how your business can comply with the Order, please contact one of the contributors to this alert.